HBG to expand PFI portfolio in the UK

Dutch contractor HBG has pledged to support its UK arm’s plans to increase its private finance initiative portfolio.

UK chief executive Adrian Franklin said that, after putting forward a business case for investing in the PFI, HBG was persuaded to commit more resources to the sector. Franklin said he aimed to increase the UK division’s PFI work by 20% by next year. The UK arm now does PFI work on law courts, police stations, schools and hospitals. To reach his target, he plans to move into new markets such as prisons. Franklin said: “The spectrum is widening by the day in pfi. I welcome the idea of people looking harder at PFI opportunities. It’s something which we have got to get a lot of support for to go forward.”

The Dutch group, which has forecast a £41m loss for 2000, has decided to back Franklin’s plan because it wants to concentrate on its more profitable operations, including the UK. The division accounts for 25% of group turnover.

The group made a £63m loss in the six months to 30 June, largely because of a poor performance in Germany. Group turnover was £1.48bn, up from £1.3bn in the same period of 1999. The loss follows a £102m provision at its German contracting arm Wayss & Freytag and writedowns on its German property portfolio.

We need a lot of support to go forward with the PFI

Adrian Franklin, UK Chief Exective

As well as HBG’s commitment to the UK, the group said it wanted to expand its international consultancy services, which are run by Dutch subsidiary Tebodin.

Franklin said the UK would increasingly link up with Tebodin to supply design and M&E consultancy for growth building types such as IT exchanges.

As part of a global review of its business, HBG said it was keen to introduce benchmarking and a value-based management programme to increase management accountability. According to Franklin, the UK arm is well ahead with measures such as benchmarking. He said: “Like everybody else, we are looking at key performance indicators and benchmarking. It’s the air that contracting breathes and it’s pretty healthy air at that.” He added that the group initiative was still positive for the UK business.

HBG bought Wayss & Freytag, Germany’s ninth-largest contractor, in 1996. But the acquisition led to a sharp fall in its profit and share price, and analysts described the purchase as “disastrous”.